The Manitowoc Company Reports Third-Quarter 2018 Financial Results

MILWAUKEE--(BUSINESS WIRE)--
The Manitowoc Company, Inc. (NYSE: MTW), a leading global manufacturer
of cranes and lifting solutions, today reported third-quarter GAAP
operating income of $16.9 million, $21.5 million on an adjusted basis
and diluted EPS (“DEPS”) on a GAAP basis of $0.32 and $0.20 on an
adjusted basis.

Third-quarter orders of $458.1 million were up 22% from the comparable
period in 2017. Backlog totaled $700.2 million at September 30, 2018, up
50% from the third-quarter 2017.

Third-quarter 2018 net sales were $450.1 million versus $399.4 million
in 2017; a year-over-year increase of 13%. The increase was attributable
to improved crane shipments across all regions, with the U.S. and Asia
Pacific markets generating the majority of the increase.

The Company reported operating income of $16.9 million, $21.5 million on
an adjusted basis, as compared to $9.8 million and $13.5 million in the
prior year, respectively. Income from continuing operations of $11.5
million, or $0.32 per diluted share improved 19% over the third-quarter
2017. Adjusted income from continuing operations(1) was $7.3
million, or $0.20 per diluted share, in the third-quarter 2018 versus
$13.3 million, or $0.37 per diluted share, in 2017. Adjusted EBITDA(1)
for the third-quarter was $30.5 million compared to $22.7 million last
year, representing a $7.8 million or 34% improvement.

“The Manitowoc team continues to deliver excellent results with our
sixth consecutive quarter of year-over-year adjusted EBITDA percentage
improvement,” commented Barry L. Pennypacker, President and Chief
Executive Officer of The Manitowoc Company, Inc. “Our operational
progress using the principles of The Manitowoc Way continue to produce
measurable improvements in a very competitive market environment.”

“We, as other industrial manufacturers, are not immune to supply chain
challenges as well as significantly higher input costs,” continued
Pennypacker. “The team has done an excellent job of effectively managing
through these headwinds, while maintaining our focus on delivering our
financial commitments.”

On Tuesday, November 6th, 2018, at 10:00 a.m. ET (9:00 a.m. CT), The
Manitowoc Company’s senior management will discuss its third-quarter
2018 earnings results during a live conference call for security
analysts and institutional investors. A live audio webcast of the call,
along with the related presentation, can be accessed in the Investor
Relations section of Manitowoc’s website at www.manitowoc.com.
A replay of the conference call will also be available at the same
location on the website.

About The Manitowoc Company, Inc.

Founded in 1902, The Manitowoc Company, Inc. is a leading global
manufacturer of cranes and lifting solutions with manufacturing,
distribution, and service facilities in 20 countries. Manitowoc is
recognized as one of the premier innovators and providers of crawler
cranes, tower cranes, and mobile cranes for the heavy construction
industry, which are complemented by a slate of industry-leading
aftermarket product support services. In 2017, Manitowoc’s net sales
totaled $1.6 billion, with over half generated outside the United States.

Footnote

(1) Non-GAAP adjusted net income (loss) (“adjusted net income (loss)”)
and non-GAAP adjusted EBITDA (“adjusted EBITDA”) are financial measures
that are not in accordance with GAAP. For a reconciliation to the
comparable GAAP numbers please see schedule of “Non-GAAP Financial
Measures” at the end of this press release. Manitowoc believes these
non-GAAP financial measures provide important supplemental information
to both management and investors regarding financial and business trends
used in assessing its results of operations. Manitowoc believes
excluding specified items provides a more meaningful comparison to the
corresponding reporting periods and internal budgets and forecasts,
assists investors in performing analysis that is consistent with
financial models developed by investors and research analysts, provides
management with a more relevant measure of operating performance and is
more useful in assessing management performance.

Forward-looking Statements

This press release includes “forward-looking statements” intended to
qualify for the safe harbor from liability under the Private Securities
Litigation Reform Act of 1995. Any statements contained in this press
release that are not historical facts are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are based on the current expectations of the
management of the Company and are subject to uncertainty and changes in
circumstances. Forward-looking statements include, without limitation,
statements typically containing words such as “intends,” “expects,”
“anticipates,” “targets,” “estimates,” and words of similar import. By
their nature, forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties because they
relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results
and developments to differ materially from those expressed or implied by
such forward-looking statements. Factors that could cause actual results
and developments to differ materially include, among others:

changes in economic or industry conditions generally or in the
markets served by Manitowoc;

unanticipated changes in customer demand, including changes in
global demand for high-capacity lifting equipment, changes in demand
for lifting equipment in emerging economies, and changes in demand for
used lifting equipment;

the ability to increase operational efficiencies across Manitowoc’s
businesses and to capitalize on those efficiencies;

the ability to significantly improve profitability;

the risks associated with growth or contraction;

changes in raw material and commodity prices;

foreign currency fluctuation and its impact on reported results and
hedges in place with Manitowoc;

the ability to focus on customers, new technologies, and innovation;

uncertainties associated with new product introductions, the
successful development and market acceptance of new and innovative
products that drive growth; and

risks and factors detailed in Manitowoc's 2017 Annual Report on
Form 10-K and its other filings with the United States Securities and
Exchange Commission.

Manitowoc undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise. Forward-looking statements only speak as of
the date on which they are made. Information on the potential factors
that could affect the Company's actual results of operations is included
in its filings with the Securities and Exchange Commission, including
but not limited to its Annual Report on Form 10-K for the fiscal year
ended December 31, 2017.

THE MANITOWOC COMPANY, INC.

Unaudited Consolidated Financial Information

For the three and nine months ended September 30, 2018 and 2017

($ in millions, except share data)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Net sales

$

450.1

$

399.4

$

1,331.5

$

1,099.8

Cost of sales

370.1

326.9

1,092.6

899.1

Gross profit

80.0

72.5

238.9

200.7

Operating costs and expenses:

Engineering, selling and administrative expenses

62.1

59.0

184.6

178.8

Asset impairment expense

—

—

0.4

—

Amortization of intangible assets

—

—

0.2

0.7

Restructuring expense

1.0

3.7

11.0

21.3

Total operating costs and expenses

63.1

62.7

196.2

200.8

Operating income (loss)

16.9

9.8

42.7

(0.1

)

Other income (expense):

Interest expense

(9.9

)

(9.6

)

(29.3

)

(29.4

)

Amortization of deferred financing fees

(0.5

)

(0.5

)

(1.4

)

(1.4

)

Other income (expense) - net

(5.7

)

(3.1

)

(8.6

)

(4.0

)

Total other expense

(16.1

)

(13.2

)

(39.3

)

(34.8

)

Income (loss) from continuing operations before taxes

0.8

(3.4

)

3.4

(34.9

)

Benefit for taxes on income

(10.7

)

(13.1

)

(8.0

)

(9.3

)

Income (loss) from continuing operations

11.5

9.7

11.4

(25.6

)

Discontinued operations:

Loss from discontinued operations, net of income taxes

—

(0.1

)

(0.2

)

(0.3

)

Net income (loss)

$

11.5

$

9.6

$

11.2

$

(25.9

)

BASIC INCOME (LOSS) PER COMMON SHARE:

Income (loss) from continuing operations

$

0.32

$

0.27

$

0.33

$

(0.74

)

Loss from discontinued operations, net of income taxes

—

—

(0.01

)

—

BASIC INCOME (LOSS) PER COMMON SHARE

$

0.32

$

0.27

$

0.32

$

(0.74

)

DILUTED INCOME (LOSS) PER COMMON SHARE:

Income (loss) from continuing operations

$

0.32

$

0.27

$

0.32

$

(0.74

)

Loss from discontinued operations, net of income taxes

—

—

(0.01

)

—

DILUTED INCOME (LOSS) PER COMMON SHARE

$

0.32

$

0.27

$

0.31

$

(0.74

)

Weighted average shares outstanding - Basic

35,564,946

35,132,857

35,488,271

35,087,982

Weighted average shares outstanding - Diluted

35,928,327

35,834,295

35,935,093

35,087,982

In the first-quarter of 2018, the Company adopted Accounting Standards
Update(“ASU”) 2017-07 “Compensation-Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost.” Under ASU 2017-07 the service component of
pension costs is included in Engineering, Selling and Administrative
expenses while the other components of pension costs are included in
Other Income (Expense) – Net on the income statement. This ASU was
applied retrospectively by adjusting the prior period financial
statements.

MANITOWOC COMPANY, INC.

Unaudited Consolidated Financial Information

As of September 30, 2018 and December 31, 2017

($ in millions)

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2018

December 31, 2017

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

$

90.6

$

123.0

Accounts receivable - net

157.3

179.2

Inventories - net

493.1

400.6

Notes receivable - net

20.0

31.1

Other current assets

55.6

56.5

Total current assets

816.6

790.4

Property, plant and equipment - net

283.9

303.7

Intangible assets - net

435.3

443.4

Other long-term assets

54.7

70.3

TOTAL ASSETS

$

1,590.5

$

1,607.8

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

391.3

$

375.8

Short-term borrowings and current portion of long-term debt

6.9

8.2

Product warranties

36.4

35.5

Customer advances

11.8

12.7

Product liabilities

20.1

20.8

Total current liabilities

466.5

453.0

Non-current liabilities:

Long-term debt

264.5

266.7

Other non-current liabilities

181.2

210.6

Total non-current liabilities

445.7

477.3

Stockholders’ equity

678.3

677.5

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$

1,590.5

$

1,607.8

MANITOWOC COMPANY, INC.

Unaudited Consolidated Financial Information

For the nine months ended September 30, 2018 and 2017

($ in millions)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended

September 30,

2018

2017

Cash flows from operations:

Net income (loss)

$

11.2

$

(25.9

)

Depreciation

27.2

29.1

Asset impairment expense

0.4

—

Other non-cash adjustments - net

7.7

6.5

Accounts receivable

(406.9

)

(279.7

)

Inventories

(106.3

)

(37.4

)

Notes receivable

18.0

15.0

Other assets

6.1

(8.5

)

Accounts payable

44.8

36.4

Accrued expenses and other liabilities

(43.1

)

(29.3

)

Net cash used for operating activities of continuing operations

(440.9

)

(293.8

)

Net cash used for operating activities of discontinued operations

(0.2

)

(0.3

)

Net cash used for operating activities

(441.1

)

(294.1

)

Cash flows from investing:

Capital expenditures

(21.4

)

(17.0

)

Proceeds from fixed assets

12.2

6.7

Cash receipts on sold accounts receivable

421.9

259.9

Other

—

0.3

Net cash provided by investing activities of continuing operations

412.7

249.9

Net cash used for investing activities of discontinued operations

—

—

Net cash provided by investing activities

412.7

249.9

Cash flows from financing:

Proceeds from (payments on) long-term debt- net

(4.6

)

2.5

Payments on notes financing - net

—

(3.6

)

Exercise of stock options

2.5

3.7

Net cash provided by (used for) financing activities of

continuing operations

(2.1

)

2.6

Net cash provided by financing activities of discontinued

operations

—

—

Net cash provided by (used for) financing activities

(2.1

)

2.6

Effect of exchange rate changes on cash

(1.9

)

1.0

Net decrease in cash, cash equivalents and restricted cash

$

(32.4

)

$

(40.6

)

In the first-quarter of 2018, the Company adopted ASU No. 2016-15 -
“Statement of Cash Flows (Topic 230): Classification of Certain Cash
Receipts and Cash Payments.” Under ASU 2016-15 cash collections related
to the deferred purchase price from the Company’s accounts receivable
securitization program are recorded as cash flows from investing.
Previously, cash collections related to the deferred purchase price were
recorded as cash flows from operating activities. This ASU was applied
retrospectively by adjusting the prior period financial statements.

Non-GAAP Financial Measures

Non-GAAP Items

Non-GAAP adjusted income (loss) from continuing operations, non-GAAP
adjusted EBITDA and non-GAAP adjusted operating cash flows are financial
measures that are not in accordance with GAAP. Manitowoc believes these
non-GAAP financial measures provide important supplemental information
to both management and investors regarding financial and business trends
used in assessing its results of operations. Manitowoc believes
excluding specified items provides a more meaningful comparison to the
corresponding reporting periods and internal budgets and forecasts,
assists investors in performing analysis that is consistent with
financial models developed by investors and research analysts, provides
management with a more relevant measure of operating performance and is
more useful in assessing management performance.

Non-GAAP Adjusted Income (Loss) and Income (Loss) Per Share from
Continuing Operations

($ in millions, except share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Income (loss) from continuing operations

$

11.5

$

9.7

$

11.4

$

(25.6

)

Special items:

Asset impairment

—

—

0.4

—

Loss on long-term Dong Yue receivable

3.6

—

3.6

—

Restructuring expense

1.0

3.7

11.0

21.3

Pension settlement charge

4.5

—

4.5

—

Tax valuation allowance and one time tax items

(12.3

)

—

(12.3

)

—

Tax on special items

(1.0

)

(0.1

)

(1.5

)

(0.1

)

Non-GAAP adjusted income (loss) from continuing

operations

$

7.3

$

13.3

$

17.1

$

(4.4

)

Diluted income (loss) from continuing operations per share

$

0.32

$

0.27

$

0.32

$

(0.74

)

Special items, net of tax:

Asset impairment

—

—

0.01

—

Loss on long-term Dong Yue receivable

0.10

—

0.10

—

Restructuring expense

0.03

0.10

0.31

0.61

Pension settlement charge

0.13

—

0.13

—

Tax valuation allowance and one time tax items

(0.38

)

—

(0.39

)

—

Diluted non-GAAP adjusted income (loss) per share

from continuing operations

$

0.20

$

0.37

$

0.48

$

(0.13

)

Non-GAAP Adjusted Operating Cash Flows

($ in millions, except share data)

Nine Months Ended

September 30,

2018

2017

Net cash used for operating activities:

$

(441.1

)

$

(294.1

)

Cash receipts on sold accounts receivable

421.9

259.9

Non-GAAP adjusted operating cash flows:

(19.2

)

(34.2

)

Adjusted EBITDA and Non-GAAP Adjusted Operating Income (loss)

The company defines adjusted EBITDA as earnings before interest, taxes,
depreciation and amortization, plus an addback of certain restructuring
charges. The reconciliation of GAAP net income (loss) to adjusted EBITDA
and adjusted operating income (loss) for the current and previous four
quarters, as well as the trailing twelve months is as follows ($ in
millions):